SFFAS 54 LEASE GUIDANCE:

RIGHT-TO-USE LEASES:

DEEMED “OPERATING LEASES” FOR BUDGETARY TREATMENT

WITH A CANCELLATION CLAUSE

GAIN/LOSS ON CANCELLATION

EFFECTIVE FISCAL YEAR 2024

PREPARED BY:

GENERAL LEDGER AND ADVISORY BRANCH

BUREAU OF THE FISCAL SERVICE

U.S. DEPARTMENT OF THE TREASURY
Version 

Number

Date Description of Change Effective USSGL TFM

1.0 01/2023 Original TFM Bulletin No. 2023-01

Proprietary Accounting Requirements & Agency Decision Points
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SFFAS No. 54, Leases, as amended by SFFAS No. 58 and SFFAS No. 60, replaces proprietary lease accounting and disclosure standards for general 

purpose federal financial reports. SFFAS No. 54 is effective for reporting periods beginning after September 30, 2023. (Early implementation is not 

permitted.)

A lease is defined as “a contract or agreement whereby one entity (lessor) conveys the right to control the use of PP&E (the underlying asset) to another 

entity (lessee) for a period of time as specified in the contract or agreement in exchange for consideration.” (SFFAS 54, Par. 6.) SFFAS No. 54 requires 

that federal lessees recognize a lease liability and a right-to-use lease asset (also referred to as a lease asset), and that federal lessors recognize a lease 

receivable and unearned revenues at the commencement of the lease term, unless the lease meets the definitional criteria of a short-term lease, contract 

or agreement that transfers ownership, or an intra-governmental lease.

For proprietary accounting, entity management is responsible for exercising professional judgement and collaborating within its agency to reach 

certain determinations before establishing proprietary accounting treatment, including:

1) Lease Term, with consideration for Options, Renewals/Terminations, and Cancellation Clauses; 

2) Calculation of Lease Asset/Liability; with consideration for Fixed vs. Variable Payments;

3) Interest Rates - Amortization of Discount on Lease Liability/Receivable; and

4) Modifications, Terminations, and any respective remeasurements.

Proprietary Lease Term & Cancellation Clauses

For proprietary accounting, calculating the lease term is pivotal because the classification between short-term leases and right-to-use leases depends 

on the lease duration. The lease term is determined to be the noncancelable lease period, plus certain periods subject to options to extend or 

terminate the lease. The noncancelable period is the shorter of the period agreed upon in the lease contract that: (1) precedes any option to extend the 

lease; or (2) precedes the first option to terminate the lease. In addition, the lessee’s lease term should include the noncancelable period, along with 

periods:

• Involving an option to extend the lease, if it is probable that the lessee or lessor will exercise that option (SFFAS 54, Par. 15a & 15c)

• Following an option to terminate the lease, if it is probable that the lessee or lessor will not exercise that option (SFFAS 54, Par. 15b & 15d)

Some specific provisions may also need to be applied when determining the lease term:

• Periods for which the lessee/lessor (1) have an option to terminate the lease without permission from the other entity, or (2) have to agree to 

extend, are considered to be cancelable periods and are thus excluded from the lease term (SFFAS 54, Par. 19a.)

• An availability of funds/cancellation clause allowing lessees to cancel a lease agreement if funds for the lease payments are not appropriated

should only affect the lease term when it is probable that the clause will be exercised (SFFAS 54, Par. 19c.)

• If a lessee has the option to purchase the underlying asset during the lease term and the contract is not a contract that transfers ownership, the 

lease term should exclude the period, after the date at which the option is probable of being exercised (SFFAS 61, Par. 19d.)
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Fixed Vs. Variable Payments

The Lessee’s lease asset and the Lessor’s lease liability should include the present value of payments expected to be made during the lease term. 

Generally, these should include:

• Fixed payments;

• Variable payments that depend on an index or a rate;

• Variable payments that are fixed in-substance; and

• Any lease incentives receivable from the lessor.

For a complete list of payment types to include in the present value of payments, please see SFFAS 54, Pars. 40 and 56.)

Variable payments based on future performance of the lessee or usage of the underlying asset should be recognized as lease expense/revenue during

the reporting period to which those payments relate. These variable payments should NOT be included in the measurement of the lease receivable/lease 

liability (See SFFAS 54, Pars. 41 and 54.) Reporting entity management should consult with appropriate procurement officials, and use professional 

judgment, to make determinations on what payments are fixed and what are variable.

Amortization of Discount on Lease Liability/Receivable - Interest Expense/Revenue

In subsequent reporting periods, the Lessee should calculate the amortization of the discount on the lease liability and recognize that amount as interest 

expense for the period. Any payments made should be allocated first to the accrued interest liability and then to the lease liability. (SFFAS 54, Par. 43)

Likewise, the Lessor should calculate the amortization of the discount on the receivable and report that amount as interest revenue for the period

(SFFAS 54, Par. 60.) 

Lease Amortization & Lessor Unearned Revenue

During the lease term, the Lessee’s lease asset should be amortized in a systematic and rational manner, over the shorter of: The lease term; or the 

useful life of the underlying asset (See SFFAS 54, Par. 50, and SFFAS 60, Pars. 20-21.)

Meanwhile, the Lessor should recognize the unearned revenue in a similar manner. (See SFFAS 54, Par. 64, as amended by SFFAS 60, Par. 26.)

Modifications/Terminations

In the event a right-to-use lease is terminated before the end of the contractual lease term (other than by a transfer of ownership/purchase of the 

underlying asset), a Lessee should account for the termination by reducing the carrying values of the lease liability and the lease asset and recognizing 

a gain/loss for the difference. Likewise, lessors should reduce the carrying value of the lease receivable and the related unearned revenue, and record 

a gain/loss for the difference.
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Budgetary Accounting Requirements & Agency Decision Points

While proprietary accounting requirements for leases are transformed by SFFAS 54, Leases, budgetary accounting requirements will remain unchanged 

and continue to be guided by the lease scorekeeping rule developed by OMB, CBO, and the House and Senate Budget Committees originally in 

connection with the Budget Enforcement Act of 1990, and guidance regarding this rule provided in OMB Circular No. A-11, Appendix B, Budgetary 

Treatment Of Lease-Purchases and Leases of Capital Assets. 

For budgetary accounting, entity management is responsible for exercising professional judgement and collaborating within its agency to reach 

certain determinations before establishing budgetary accounting treatment, including: 

1) Operating vs. Capital Lease (as defined by Appendix B of OMB Circular No. A-11); 

2) Budgetary Lease Term, with consideration for Cancellation Clauses; and

3) Budget Authority and Outlays. 

Operating/Capital/Lease Purchase 

Reporting entities should apply professional judgment, consistent with the guidance in Appendix B of OMB Circular No. A-11, on Operating 

Leases/Capital Leases criteria to discern the correct budgetary treatment of each lease contract. The differences in budgetary accounting treatment 

between Operating and Capital leases are extensive; see Appendix B of OMB Circular No. A-11 for more details. In order for a lease to qualify for

Operating lease treatment for budgetary accounting purposes, a lease must meet the following criteria established in the scorekeeping rule:

• Ownership of the asset remains with the lessor during the term of the lease and is not transferred to the Government at or shortly after the end 

of the lease term; 

• The lease does not contain a bargain-price purchase option; 

• The lease term does not exceed 75 percent of the estimated economic life of the asset; 

• The present value of the minimum contractually required payments over the life of the lease does not exceed 90 percent of the fair market 

value of the asset at the beginning of the lease term; 

• The asset is a general purpose asset rather than being for a special purpose of the Government and is not built to the unique specification of the 

Government as lessee; and 

• There is a private sector market for the asset.” 

Lease Term & Cancellation Clauses

When initiating lease contracts with a cancellation clause, entities are required to presume the lease will run for the full term of the contract when 

calculating the lease term as part of the budgetary accounting analysis necessary to distinguish between an Operating/Capital Lease. 

“Cancellation clauses. It will be presumed that the lease will run for the full term of the contract, and the minimum payments will be calculated on the 

basis of the lease and other contractually required payments that will be made over the full term of the lease (including options to renew).” (OMB 

Circular No. 11, Page 8 of Appendix B.) 
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Budget Authority and Outlays – Operating Lease 

Budget Authority for Operating Leases should be recorded in an amount equal to the total contractually required payments under the full term of the 

lease, or (if there is a cancellation clause) the amount sufficient to cover first year lease and other contractually required payments plus cancellation 

costs up front. Meanwhile, outlays of Operating Leases are scored over the lease term in an amount equal to the annual lease and other contractually 

required payments. 

“For operating leases, budget authority is required to be obligated up front in the amount necessary to cover the Government's legal obligations, consistent

with the requirements of the Antideficiency Act. This will include the estimated total payments expected to arise under the full term of the contract or, 

if the contract includes a cancellation clause, an amount sufficient to cover the lease and other contractually required payments for the first year 

plus an amount sufficient to cover the costs associated with cancellation of the contract. For each subsequent year, sufficient budget authority 

is required to be obligated to cover the annual lease payment for that year plus any additional cancellation costs. For operating leases funded by 

the General Services Administration's Federal Buildings Fund (which is self-insuring under existing authority), only the amount of budget authority 

needed to cover the annual lease payment is required to be obligated.” 

Right-To-Use Leases Determined to be “Operating” for Budgetary Treatment- With Cancellation Clauses

Listing of USSGL Accounts Used in This Scenario:

Account Number Account Title

Budgetary

406000 Anticipated Collections From Non-Federal Sources

411900 Other Appropriations Realized

426600 Other Actual Business-Type Collections From Non-Federal Sources

445000 Unapportioned – Unexpired Authority

449000 Anticipated Resources - Unapportioned Authority

451000 Apportionments

459000 Apportionments – Anticipated Resources – Programs Subject to Apportionment

461000 Allotments – Realized Resources

480100 Undelivered Orders – Obligations, Unpaid

490100 Delivered Orders – Obligations, Unpaid

490200 Delivered Orders – Obligations, Paid

Proprietary

101000 Fund Balance With Treasury

134000 Interest Receivable - Not Otherwise Classified
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175000 Equipment

175900 Accumulated Depreciation on Equipment

193000 Lessor Lease Receivable*1

193900 Allowance for Loss on Lease Receivable*

195000 Lessee Right-To-Use Lease Asset*

195900 Accumulated Amortization on Lessee Lease Assets*

214000 Accrued Interest Payable - Not Otherwise Classified

214010 Unfunded Accrued Interest Payable*

233000 Unearned Lessor Revenue*

293000 Lessee Lease Liability*

293010 Unfunded Lessee Lease Liability*

310100 Unexpended Appropriations – Appropriations Received

310700 Unexpended Appropriations - Used - Accrued

310710 Unexpended Appropriations - Used - Disbursed

331000 Cumulative Results of Operations

531000 Interest Revenue - Other

570000 Expended Appropriations - Accrued

570010 Expended Appropriations - Disbursed

593000 Lessor Lease Revenue*

593300 Amortization of Unearned Lessor Revenue *

633000 Other Interest Expense

671000 Depreciation, Amortization, and Depletion

671300 Lessee Lease Amortization*

693000 Lessee Lease Expense*

1 See Treasury Financial Manual, Volume 1, USSGL Supplements, Section II for Account Definitions of new lease accounts.
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Key Assumptions Driving Proprietary Accounting Entries: 

Lease Term

• A federal reporting entity (Lessee) signs a 5-year lease with a non-federal entity (Lessor) for the right to control/right to use equipment. (For 

illustration purposes, the scenario also shows posting logic for a federal Lessor working with a non-federal Lessee under a separate heading.)

• For illustration purposes, the lease begins at the start of the fiscal year. 

• No purchase option probable of being exercised exists.

• The lease includes an availability of funds cancellation clause that allows the Lessee to cancel the lease on an annual basis, if funds for the 

lease payments are not appropriated. Management determines it is not probable that the clause will be exercised. 

• The lease contains a fixed $5,000 cancellation penalty. 

• Since management determines the cancellation clause is not probable of being exercised, the lease term is calculated at 5 years, and the lease 

is determined to be a Right-To-Use Lease.

• All monthly payments are made at the last business day of the month – This scenario assumes payments are made directly to vendor and that 

there is no lag time between disbursement, authorization, and receipt. 

Lease Asset/Liability Calculation

• The contract amount is $120,000 ($2,000 monthly payments x 60 months.) 

• Management calculates the Present Value of all expected fixed payments to be $94,131. The Lessor charges the Lessee the Treasury Rate of 

10.00%. 

• The Lessor already has equipment on its Balance Sheet valued at $300,000 with $150,000 Accumulated Depreciation. 

Fixed & Variable Payments 

• Management determines the lease contains both fixed and variable payments. Fixed payments include a minimum annual payment required 

by the lease contract, and lease payments (including interest) are paid at the start of the year. 

• In addition, there is a $12 per hour charge for the use of the equipment, which management deems to be a Variable payment based on future 

usage of the underlying asset. This variable payment will not to be included in the Lease Liability/Lease Receivable per SFFAS 54, Par. 41. 

(Also See Technical Release 20, Lease Implementation Guidance, Par. 48 for more information on Variable Payments.)

• Management determines that the Fixed minimum lease payment is "contractually required payments" per OMB Circular A-11, Appendix B. 

• Management determines that the Variable costs related to the usage of the equipment are also "contractually required payments" per OMB 

Circular A-11, Appendix B, and estimates these to be $1,500 for each year of the lease term. 
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Key Assumptions Driving Budgetary Accounting Entries: 

Budgetary Authority 

• The Lessee received a direct appropriation and is working from a multi-year appropriated TAFS from a general fund expenditure account. 

Agency management has concluded that appropriations language allows the budget authority to remain available for the lease and other 

contractually required payments over the full term of the lease. 

• For illustration purposes, the lease begins at the start of the fiscal year. 

• The Lessor charges the Lessee the Treasury Interest Rate from OMB Circular No. A-94, Appendix C, of 10.00%. 

• Management determines that the Fixed costs for the lease of equipment are "contractually required payments" per OMB Circular No. A-11, 

Appendix B. 

• The lease is not funded by the General Services Administration's Federal Buildings Fund. 

Budgetary Lease Capital/Operating Determination

• Management determines the lease to be an “Operating lease” for budgetary purposes with a cancellation clause. Therefore, budget authority 

should include “an amount sufficient to cover the lease and other contractually required payments for the first year, plus an amount sufficient 

to cover the costs associated with cancellation of the contract.” For each subsequent year, sufficient budget authority is required to be 

obligated to cover the annual lease payment for that year plus any additional cancellation costs. 

Budgetary Outlays 

• As an Operating lease per budgetary treatment, leases will be scored over the lease term in an amount equal to the annual lease and other 

contractually required payments. 

Cancellation Clauses

• The lease includes an availability of funds cancellation clause, with a fixed $5,000 cancellation penalty. For this scenario, there is not an 

assumption of additional cancellation costs in subsequent years. 

• The lease does not contain renewal/purchase options, and is not associated with government land. 
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Amortization Table

 Contract Amount $120,000 

 5-Year Lease with 60 monthly payments of $2,000 each 

 Treasury Interest Rate of 10.0% 

 Present Value of Payments = $94,131 

 Lessee Right-To-Use- Asset & Lease Liability amount: $94,131 

 Year 1 Budget Authority = $15,274 Lease Payments; $8,726 Interest Expense = $24,000 

 Year 2 Budget Authority = $16,874 Lease Payments; $7,126 Interest Expense = $24,000 

 For illustration purposes, the lease begins at the start of the fiscal year.

 Monthly payments are considered to be disbursed on the last business day of each month.

Disclaimer

The below guidance is intended to serve as a reference only based on a finite number of underlying assumptions. It is in no way intended to provide 

comprehensive posting logic for every leasing activity. Agencies should have a thorough understanding of authoritative standards SFFAS 54, SFFAS 

60, and SFFAS 61 and apply other factors, including but not limited to certain prepayments, accruals, etc. As stated above, agency management must 

exercise professional judgement and collaborate within their agency to reach determinations of lease activities on a lease-by-lease basis, before 

establishing accounting treatment. 

Entity management should document these decisions and incorporate them into management’s existing OMB Circular No. A-123, “Management's 

Responsibility for Enterprise Risk Management and Internal Control,” Appendix A, procedures. 
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FISCAL YEAR 1 - Right-To-Use Leases; “Operating” for Budgetary Treatment; With A Cancellation Clause

Lessee Accounting

1. The Lessee records the enactment of appropriations in Year 1 of the 5-year Operating lease. The lease includes a cancellation clause.

Per OMB Circular No. A-11, Appendix B, budget authority for leases considered “Operating leases” on the budgetary side with a cancellation clause is required 

to be obligated in an amount sufficient to cover the lease and other contractually required payments for the first year, plus cancellation costs. (Budget 

Authority = Year 1 Lease P&I Payment of $24,000; + $1,500 Estimated variable payments for the usage of the equipment; + $5,000 cancellation costs = 

$30,500.)

Lessee - Enactment of appropriation for Year 1. Debit Credit TC

Budgetary Entry

411900 Other Appropriations Realized 

 445000 Unapportioned - Unexpired Authority 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 310100 (G) Unexpended Appropriations – Appropriations Received

30,500 

30,500 

30,500 

30,500 

A104 

2. The Lessee records budgetary authority apportioned by the Office of Management and Budget and available for allotment in Year 1.

Lessee Debit Credit TC

Budgetary Entry

445000 Unapportioned - Unexpired Authority 

 451000 Apportionments 

Proprietary Entry 

None 

30,500 

30,500 

A116 
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3. The Lessee records the allotment of authority in Year 1.

Lessee Debit Credit TC

Budgetary Entry

451000 Apportionments 

 461000 Allotments – Realized Resources 

Proprietary Entry 

None 

30,500 

30,500 

A120 

4. The lease contract is signed by both parties. The Lessee records current-year undelivered orders without an advance.

Lessee Debit Credit TC

Budgetary Entry

461000 Allotments – Realized Resources

 480100 Undelivered Orders – Obligations, Unpaid

Proprietary Entry 

None 

30,500 

30,500 B306 

5. The Lessee takes control over the use of the equipment. A Lease Asset and Lease Liability are recorded per SFFAS 54, Par. 40 & Par. 49.

$15,274 of the lease liability (principle) is covered from the Year 1 appropriation. $78,857 of the lease liability will be funded by future appropriations and is 

recorded as an Unfunded Lease Liability. ($94,131 - $15,274 = $78,857.)

Lessee – Recognition of Right-to-Use Lease Asset Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

195000 Lessee Right-To-Use Lease Asset

 293000 Lessee Lease Liability

 293010 Unfunded Lease Liability 

 94,131 

15,274 

 78,857 
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6a. The lessee records accrued interest for month 1, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 1. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense

 214000 Accrued Interest Payable – Not Otherwise Classified

784 

784 

B418 

7a. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,216 

 784 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $92,915

8a. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 1. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $92,562
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6b. The lessee records accrued interest for month 2, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 2. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

774 

774 

B418 

7b. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,226 

 774 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $91,689

8b. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 2. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $90,993
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6c. The lessee records accrued interest for month 3, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 3. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

764 

764 

B418 

7c. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,236 

 764 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $90,454

8c. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 3. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $89,424
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6d. The lessee records accrued interest for month 4, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 4. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

754 

754 

B418 

7d. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,246 

 754 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $89,207

8d. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 4. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $87,855
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6e. The lessee records accrued interest for month 5, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 5. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

743 

743 

B418 

7e. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,257 

 743 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $87,951

8e. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 5. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $86,287
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 20 of 73 November 2022

6f. The lessee records accrued interest for month 6, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 6. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

733 

733 

B418 

7f. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,267 

 733 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $86,684

8f. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 6. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $84,718
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 21 of 73 November 2022

6g. The lessee records accrued interest for month 7, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 7. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

722 

722 

B418 

7g. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,278 

 722 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $85,406

8g. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 7. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $83,149
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 22 of 73 November 2022

6h. The lessee records accrued interest for month 8, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 8. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

712 

712 

B418 

7h. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,288 

 712 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $84,118

8h. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 8. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $81,580
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 23 of 73 November 2022

6i. The lessee records accrued interest for month 9, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 9. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

701 

701 

B418 

7i. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,299 

 701 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $82,819

8i. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 9. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $80,011
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 24 of 73 November 2022

6j. The lessee records accrued interest for month 10, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the 

lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 10. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

690 

690 

B418 

7j. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,310 

 690 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $81,509

8j. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 10. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $78,442
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 25 of 73 November 2022

6k. The lessee records accrued interest for month 11, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the 

lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 11. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

679 

679 

B418 

7k. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,321 

 679 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $80,188

8k. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 11. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $76,873
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 26 of 73 November 2022

6l. The lessee records accrued interest for month 12, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the 

lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Month 12. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

668 

668 

B418 

7l. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,332 

 668 

2,000 

 

2,000 

2,000 

2,000 

B110 

B234 

Ending Lease Liability Balance (USSGL 293000) = $78,856

8l. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Month 12. Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $75,305
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 27 of 73 November 2022

9. At the end of Year 1, the Lessee calculates 125 hours of equipment usage at $12/ hour ($1,500.) Variable payments should be recognized as an expense in the 

period incurred (SFFAS 54, Par. 41.) Budget Authority was received in Year 1’s appropriation. The invoice is due for payment at the beginning of Year 2. 

Lessee - Accrual of Variable Expenses Incurred in Year 1 (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490100 Delivered Orders – Obligations, Unpaid 

Proprietary Entry 

693000 (N) Lessee Lease Expense 

 211000 (N) Accounts Payable 

 310700 Unexpended Appropriations - Used - Accrued

 570000 Expended Appropriations - Used - Accrued

1,500 

 

 1,500 

1,500 

1,500 

1,500 

1,500 

B402 

B134 

10. The Lessee records the closing of lease and interest expenses to cumulative results of operations.

Lessee Debit Credit TC

Budgetary Entry

None 

Proprietary Entry

331000 Cumulative Results of Operations 

 693000 (N) Lessee Lease Expense 

 671300 Lessee Lease Amortization 

 633000 (N) Other Interest Expense 

 

29,052 

 1,500 

18,826 

 8,726 

F336 

11. The Lessee records the closing of expended appropriation to cumulative results of operations, along with the closing of fiscal-year activity to unexpended 

appropriations. 

Lessee Debit Credit TC
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 28 of 73 November 2022

Budgetary Entry

None 

Proprietary Entry

570000 Expended Appropriations - Used - Accrued

570010 Expended Appropriations – Disbursed

 331000 Cumulative Results of Operations 

 

310000 Unexpended Appropriations – Cumulative

 310700 Unexpended Appropriations - Used - Accrued

 310710 Unexpended Appropriations - Used – Disbursed

310100 (G) Unexpended Appropriations – Appropriations Received

 310000 Unexpended Appropriations - Cumulative

 1,500 

 24,000 

 25,500 

30,500 

25,500 

 1,500 

24,000 

30,500 

F336 

F342 

F342 

12. The Lessee records the closing of paid delivered orders to total actual resources.

Lessee Debit Credit TC

Budgetary Entry

490200 Delivered Orders – Obligations, Paid 

 420100 Total Actual Resources, Collected 

Proprietary Entry

None 

24,000 

24,000 

F314 

13. The Lessee records the consolidation of actual net-funded resources.

Lessee Debit Credit TC

Budgetary Entry

420100 Total Actual Resources, Collected 

 411900 Other Appropriations Realized 

 

Proprietary Entry 

 None 

30,500 

30,500 F302 
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 29 of 73 November 2022

Lessor Accounting

1. In Year 1, the Lessor records anticipated collections. (The amount of expected Year 1 monthly payments is $24,000.)

Lessor Debit Credit TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 449000 Anticipated Resources - Unapportioned Authority 

Proprietary Entry

None

24,000 

24,000 

A140 

2. The Lessor records the apportionment approval by OMB of anticipated authority.

Lessor Debit Credit TC

Budgetary Entry

449000 Anticipated Resources - Unapportioned Authority 

 459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 

Proprietary Entry

None

24,000 

24,000 A118 

3. The Lessee takes control over the use of the equipment; The lease term is 5 years. A Lease Receivable and Unearned Revenue are recorded per SFFAS 54. 

Also per SFFAS 54, Par. 56, the Lessor reduces the lease receivable by a provision for any uncollectible amounts. 

Lessor – Recognition of Lease Receivable Debit Credit TC

Budgetary Entry

None 

Proprietary Entry

193000 Lessor Lease Receivable 

193900 Allowance for Loss on Lease Receivable 

 233000 Lessor Lease Unearned Revenue 

94,131 

 2,000 

92,131 
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 30 of 73 November 2022

4a. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 1. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 1, Month 1 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

784

784

5a. In month 1, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of first Monthly Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 784

 1,216

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $92,915

6a. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 1, Month 1 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

 Page 31 of 73 November 2022

4b. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 2. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 1, Month 2 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

774 

774 

5b. In month 2, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of second Monthly Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 774 

 1,226 

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $91,689

6b. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 1, Month 2 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

 Page 32 of 73 November 2022

4c. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 3. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 1, Month 3 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

764 

764 

5c. In month 3, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of third Monthly Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 764 

 1,236 

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $90,454

6c. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 1, Month 3 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

 Page 33 of 73 November 2022

4d. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 4. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 1, Month 4 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

764 

764 

5d. In month 4, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of fourth Monthly Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 764 

 1,236 

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $89,207

6d. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 1, Month 4 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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4e. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 5. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 1, Month 5 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

743

743

5e. In month 5, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of fifth Monthly Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 743

 1,257

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $87,951

6e. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 1, Month 5 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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4f. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 6. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 1, Month 6 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

733

733

5f. In month 6, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of sixth Monthly Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 733

 1,267

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $86,684

6f. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 1, Month 6 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

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*(For simplicity, the recurring entries of Lessor Receipts for Months 7-12 are not illustrated, but amounts can be seen in the amortization table.)* 

7. The Lessee calculates 125 hours of equipment usage at $12/ hour in Year 1 = $1,500. Variable payments should be recognized as revenue in the period in 

which they are earned (SFFAS 54, Par. 57.) The invoice is due for payment at the beginning of Year 2. 

Lessor - Accrual of Lease Revenue for Variable Payments Earned in Year 1. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

131000 (N) Accounts Receivable 

 593000 (N) Lessor Lease Revenue 

1,500 

1,500 

8. In Year 1, the Lessor records depreciation expense on equipment it owns (the underlying asset within the lease.) $300,000 cost / 20-year useful life = $15,000.

Lessor Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

671000 (N) Depreciation, Amortization, and Depletion 

 175900 Accumulated Depreciation on Equipment 

15,000 

15,000 

E120 

9. The Lessor records the closing of revenue to cumulative results of operations.

Lessor Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

593300 Amortization of Unearned Lessor Revenue

593000 (N) Lessor Lease Revenue 

531000 Interest Revenue - Other

 331000 Cumulative Results of Operations 

18,826 

 1,500 

 8,726 

29,052 

F336 
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10. The Lessor records the closing of depreciation expense to cumulative results of operations.

Lessor Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

331000 Cumulative Results of Operations 

 671000 Depreciation, Amortization, and Depletion 

15,000 

15,000 

F336 

11. The Lessor records the closing of unobligated balances in programs subject to apportionment to unapportioned authority.

Lessor Debit Credit TC

Budgetary Entry

461000 Allotments – Realized Resources 

 445000 Unapportioned – Unexpired Authority 

Proprietary Entry 

None 

24,000 

24,000 

F308 

12. The Lessor records the consolidation of actual net-funded resources.

Lessor Debit Credit TC

Budgetary Entry

420100 Total Actual Resources, Collected 

 426600 Other Actual Business-Type Collections From Non-Federal Sources

 

Proprietary Entry 

 None 

24,000 

24,000 

F302 
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Fiscal Year 1 Post-Closing Adjusted Trial Balance: 

FISCAL YEAR 1 POST-CLOSING LESSEE LESSOR

Account Description Debit Credit Debit Credit

Budgetary

420100 Total Actual Resources, Collected 6,500 - 24,000 -

445000 Unapportioned - Unexpired Authority - - - 24,000

480100 Undelivered Orders – Obligations, Unpaid - 5,000 - -

490100 Delivered Orders, Obligations Unpaid - 1,500 - -

490200 Delivered Orders – Obligations, Paid - - - -

Total 6,500 6,500 24,000 24,000

Proprietary

101000 (G) Fund Balance With Treasury 6,500 - 24,000 -

131000 Accounts Receivable - - 1,500 -

175000 Equipment - - 300,000 -

175900 Acc. Depreciation on Equipment - - - 165,000

193000 Lessor Lease Receivable - - 78,857 -

193900 Allowance for Loss on Lease Receivable - - - 2,000

195000 Lessee Right-To-Use Lease Asset 94,131 - - -

195900 Accumulated Amortization on Lessee Lease Assets - 18,826 - -

211000 Accounts Payable - 1,500 - -

233000 Unearned Lessor Revenue - - - 73,305

293000 Lessee Lease Liability - - - -

293010 Unfunded Lessee Lease Liability - 78,857 - -

310000 Unexpended Appropriations - Cumulative - 5,000 - -

331000 Cumulative Results of Operations 3,552 - - 164,052

Total 104,183 104,183 404,357 404,357
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Effective Fiscal 2024

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Year 1 Financial Statements:

STANDARDIZED BALANCE SHEET – YEAR 1

Line No. YEAR 1 LESSEE LESSOR

Assets (Note 2)

Intra-governmental

1 Fund Balance with Treasury (Note 3) (101000) 6,500 24,000

7 Total intra-governmental assets 6,500 24,000

Other than intra-governmental

9 Accounts receivable, net (Notes 6 and 7) (131000N) - 1,500

12 General and right-to-use property, plant, and equipment, net (Note 10) (175000E, 175900E, 195000E, 

195900E) 75,305 135,000

17 Other assets (Note 12) (193000E, 193900E) - 76,857

18 Total other than intra-governmental 75,305 213,357

19 Total assets 81,805 237,357

Liabilities (Note 13)

Other than intra-governmental

28 Accounts payable (211000N) 1,500 -

36 Advances from others and deferred revenue (233000N) - 73,305

37 Other liabilities (Notes 18, 19, and 20) (293010E) 78,857 -

38 Total other than intra-governmental 80,357 73,305

39 Total liabilities 80,357 73,305

Net position

41.2 Unexpended appropriations - Funds from other than Dedicated Collections (310000E) 5,000 -

42.2 Cumulative results of operations - Funds from other than Dedicated Collections (331000E) (3,552) 164,052

43 Total net position 1,448 164,052

44 Total liabilities and net position 81,805 237,357

STATEMENT OF NET COST – YEAR 1

Line No. YEAR 1 LESSEE LESSOR

Gross Program Costs (Note 21):

1 Gross costs (633000E, 671000E, 671300E, 693000E) 29,052 15,000

2 Less: earned revenue (531000E, 593000E, 593300E) - 29,052

3 Net program costs 29,052 (14,052)

5 Net program costs including Assumption Changes: 29,052 (14,052)

8 Net cost of operations 29,052 (14,052)
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STATEMENT OF CHANGES IN NET POSITION – YEAR 1

Line No. YEAR 1 LESSEE LESSOR

Unexpended Appropriations:

4 Appropriations received (310100E) 30,500 -

7 Appropriations used (310700E, 310710E) 25,500 -

8 Net Change in Unexpended Appropriations (calc.) 5,000 -

9 Total Unexpended Appropriations – Ending (calc.) 5,000 -

Cumulative Results of Operations:

10 Beginning Balances (331000B) - 150,000

12 Beginning balances, as adjusted - 150,000

14 Appropriations used (570000E, 570010E) 25,500 -

21 Revenue From (Net Cost of) Operations (+/-) (29,052) 14,052

22 Net Change in Cumulative Results of Operations (29,052) 14,052

23 Cumulative Results of Operations – Ending (3,552) 164,052

24 Net Position (calc.) 1,448 164,052

Year 1 Reclassified Financial Statements:

STANDARDIZED BALANCE SHEET – YEAR 1

Line No. YEAR 1 LESSEE LESSOR

Assets (Note 2)

Intra-governmental

1 Fund Balance with Treasury (Note 3) (101000) 6,500 24,000

7 Total intra-governmental assets 6,500 24,000

Other than intra-governmental

9 Accounts receivable, net (Notes 6 and 7) (131000N) - 1,500

12 General and right-to-use property, plant, and equipment, net (Note 10) (175000E, 175900E, 195000E, 

195900E) 75,305 135,000

17 Other assets (Note 12) (193000E, 193900E) - 76,857

18 Total other than intra-governmental 75,305 213,357

19 Total assets 81,805 237,357
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Effective Fiscal 2024

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Liabilities (Note 13)

Other than intra-governmental

28 Accounts payable (211000N) 1,500 -

36 Advances from others and deferred revenue (233000N) - 73,305

37 Other liabilities (Notes 18, 19, and 20) (293010E) 78,857 -

38 Total other than intra-governmental 80,357 73,305

39 Total liabilities 80,357 73,305

Net position

41.2 Unexpended appropriations - Funds from other than Dedicated Collections (310000E) 5,000

42.2 Cumulative results of operations - Funds from other than Dedicated Collections (331000E) 3,552 164,052

43 Total net position 1,448 164,052

44 Total liabilities and net position 81,805 237,357

RECLASSIFIED STATEMENT OF NET COST – YEAR 1

Line No. YEAR 1 LESSEE LESSOR

1 Gross cost

2 Non-federal gross cost (633000E, 671000E, 671300E, 693000E) 29,052 15,000

6 Total non-federal gross cost (calc.) 29,052 15,000

9 Department total gross cost (calc.) 29,052 15,000

10 Earned revenue

11 Non-federal earned revenue (531000E, 593000E, 593300E) - 29,052

14 Department total earned revenue (calc.) - 29,052

15 Net cost of operations (calc.) 29,052 (14,052)

RECLASSIFIED STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION – YEAR 1

Line No. YEAR 1 LESSEE LESSOR

1 Net position, beginning of period (310000B, 331000B) - 150,000

7 Financing sources:

7.1 Appropriations received as adjusted (rescissions and other adjustments) (RC 41)/1 (310100E) 30,500 -

7.2 Appropriations used (RC 39) (310700E, 310710E) 25,500 -

7.3 Appropriations expended (RC 38)/1 (570000E, 570010E) (25,500) -

7.30 Total financing sources (calc.) 30,500 -

8 Revenue From (Net cost of) Operations (+/-) (29,052) 14,052

9 Net position, end of period (calc.) 1,448 164,052
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Effective Fiscal 2024

 Page 42 of 73 November 2022

FISCAL YEAR 2 - Right-To-Use Leases; “Operating” for Budgetary Treatment; With A Cancellation Clause

Lessee Accounting

1. The Lessee receives funding and appropriation for Year 2, and records the enactment of appropriations in Year 2 of the 5-year Operating lease. Per OMB 

Circular No. A-11, Appendix B, budget authority for leases considered “Operating leases” for budgetary treatment with a cancellation clause is required to be 

obligated in an amount sufficient to cover the lease and other contractually required payments for the year, plus cancellation costs. 

(Year 2 Lease Payment of $24,000; + $1,500 Estimated variable payments for the usage of the equipment = $25,500.) The $5,000 cancellation cost was 

already obligated in Year 1, and is not adjusted.

Lessee - Enactment of appropriation for Year 2. Debit Credit TC

Budgetary Entry

411900 Other Appropriations Realized 

 445000 Unapportioned - Unexpired Authority 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 310100 (G) Unexpended Appropriations – Appropriations Received

25,500 

25,500 

25,500 

25,500 

A104 

2. The Lessee records budgetary authority apportioned by the Office of Management and Budget and available for allotment in Year 2.

Lessee Debit Credit TC

Budgetary Entry

445000 Unapportioned - Unexpired Authority 

 451000 Apportionments 

Proprietary Entry 

None 

25,500 

25,500 

A116 
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 Page 43 of 73 November 2022

3. The Lessee records the allotment of authority in Year 2.

Lessee Debit Credit TC

Budgetary Entry

451000 Apportionments 

 461000 Allotments – Realized Resources 

Proprietary Entry 

None 

25,500 

25,500 

A120 

4. The Lessee records current-year undelivered orders without an advance.

Lessee Debit Credit TC

Budgetary Entry

461000 Allotments – Realized Resources

 480100 Undelivered Orders – Obligations, Unpaid 

Proprietary Entry 

None 

25,500 

25,500 

B306 
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Effective Fiscal 2024

 Page 44 of 73 November 2022

5. In Year 2, the Lessee pays the variable lease payment to Lessor for the accrued usage of the equipment in Year 1. The Lessee records the disbursement of 

appropriations for the second year.

Lessee - Disbursement of Payment to Lessor for Variable Expenses Incurred and Accrued in Year 

1.

Debit Credit TC

Budgetary Entry

490100 Delivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

211000 (N) Accounts Payable 

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

570000 Expended Appropriations - Used - Accrued 

 310700 Unexpended Appropriations - Used - Accrued 

 570010 Expended Appropriations - Disbursed

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

B110 

B235 

6. The Lessee continues control over the use of the equipment; the cancellation clause was not used. After receiving budget authority from Year 2 

appropriations, the Lessee reclassifies the amount of principal due in Year 2 from Unfunded Lease Liability to Lease Liability. (See amortization table.)

Lessee Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

293010 Unfunded Lessee Lease Liability

 293000 Lessee Lease Liability 

16,874 

16,874 

 
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 45 of 73 November 2022

7a. The lessee records accrued interest for Year 2, Month 1, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on 

the lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 1. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

657 

657 

B418 

8a. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,343 

 657 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $77,513

9a. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50) 

Lessee - Amortization of Lease Asset for Year 2, Month 1. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $73,736
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Effective Fiscal 2024

 Page 46 of 73 November 2022

7b. The lessee records accrued interest for month 2, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 2. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

646 

646 

B418 

8b. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,354 

 646 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $76,159

9b. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 2. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $72,167
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Effective Fiscal 2024

 Page 47 of 73 November 2022

7c. The lessee records accrued interest for month 3, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 3. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

635 

635 

B418 

8c. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,365 

 635 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $74,794

9c. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 3. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $70,598
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Effective Fiscal 2024

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7d. The lessee records accrued interest for month 4, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 4. Debit Credit TC

Budgetary Entry

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

623 

623 B418 

8d. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,377 

 623 

2,000 

2,000 

2,000 

 2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $73,417

9d. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 4. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569

Ending Lease Asset Balance (USSGL 195000 - 195900) = $69,029
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Effective Fiscal 2024

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7e. The lessee records accrued interest for month 5, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 5. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

612 

612 

B418 

8e. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed

 570010 Expended Appropriations - Disbursed

2,000 

1,388 

 612 

2,000 

2,000 

2,000 

 2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $72,029

9e. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 5. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569

Ending Lease Asset Balance (USSGL 195000 - 195900) = $67,460
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Effective Fiscal 2024

 Page 50 of 73 November 2022

7f. The lessee records accrued interest for month 6, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 6. Debit Credit TC

Budgetary Entry

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

600 

600 

B418 

8f. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,400 

 600 

2,000 

2,000 

2,000 

 2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $70,629

9f. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 6. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $65,892
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 51 of 73 November 2022

7g. The lessee records accrued interest for month 7, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 7. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

589 

589 

B418 

8g. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,411 

 589 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $69,218

9g. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 7. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569

Ending Lease Asset Balance (USSGL 195000 - 195900) = $64,323
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 52 of 73 November 2022

7h. The lessee records accrued interest for month 8, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 8. Debit Credit TC

Budgetary Entry

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

577 

577 

B418 

8h. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,423 

 577 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $67,795

9h. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 8. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $62,754
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 53 of 73 November 2022

7i. The lessee records accrued interest for month 9, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the lease 

liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 9. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

565 

565 

B418 

8i. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,435 

 565 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $66,360

9i. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 9. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $61,185
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 54 of 73 November 2022

7j. The lessee records accrued interest for month 10, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the 

lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 10. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

553 

553 

B418 

8j. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,447 

 553 

2,000 

2,000 

2,000 

 2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $64,913

9j. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 10. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569

Ending Lease Asset Balance (USSGL 195000 - 195900) = $59,616
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 55 of 73 November 2022

7k. The lessee records accrued interest for month 11, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the 

lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 11. Debit Credit TC

Budgetary Entry

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

541 

541 

B418 

8k. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,459 

 541 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $63,454

9k. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 11. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $58,047
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 56 of 73 November 2022

7l. The lessee records accrued interest for month 12, per the proprietary amortization schedule. The lessee should calculate the amortization of the discount on the 

lease liability and recognize that amount as interest expense for the period. (SFFAS 54, Par. 43) 

Lessee - Accrual of Interest Expense for Year 2, Month 12. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

633000 Other Interest Expense 

 214000 (N) Accrued Interest Payable – Not Otherwise Classified

529 

529 

B418 

8l. The Lessee makes the monthly lease payment to Lessor and records the disbursement of appropriations for the fiscal year.

Lessee - Disbursement of Monthly Lease Payment (Budget Authority received in Year 2.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

293000 Lessee Lease Liability 

214000 (N) Accrued Interest Payable – Not Otherwise Classified

 101000 (G) Fund Balance With Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

2,000 

1,471 

 529 

2,000 

2,000 

2,000 

2,000 

B235 

Ending Lease Liability Balance (USSGL 293000) = $61,982

9l. The Lessee records amortization of the right-to-use Lease Asset. ($94,131 / 5 Year Life of Lease / 12 months = $1,569 Straight-line Amortization per month.) 

A lease asset should be amortized in a systematic and rational manner over the shorter of: The lease term; OR the useful life of the underlying asset. (SFFAS 54, Par. 

50)

Lessee - Amortization of Lease Asset for Year 2, Month 12. Debit Credit TC

Budgetary Entry - None

Proprietary Entry 

671300 Lessee Lease Amortization 

 195900 Accumulated Amortization on Lessee Lease Assets

1,569 

1,569 

Ending Lease Asset Balance (USSGL 195000 - 195900) = $56,478
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 57 of 73 November 2022

10. The Lessee calculates 125 hours of equipment usage at $12/ hour in Year 2; Variable payments should be recognized as an expense in the period incurred

(SFFAS 54, Par. 41.) $1,500 of Budget Authority was already received in Year 1’s appropriation. The invoice is due for payment at the beginning of Year 3. 

Lessee - Accrual of Variable Expenses Incurred in Year 2 (Budget Authority received in Year 1.) Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490100 Delivered Orders – Obligations, Unpaid 

Proprietary Entry 

693000 (N) Lessee Lease Expense

 211000 (N) Accounts Payable 

 310700 Unexpended Appropriations - Used - Accrued

 570000 Expended Appropriations - Used - Accrued 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

B306 

B134 

11. At the end of Year 2 of the lease, the Lessee learns it does not receive funding/new appropriation; The lease contract is fully cancelled. The Lessee pays the 

Lessor the $5,000 cancellation penalty. Both parties reduce the carrying values of the lease asset/liability and recognize a gain/loss for the difference (SFFAS 

54, Pars. 82-83.) 

The carrying value of the Lessee Lease Liability is $61,982, while the value of the Lease Asset is $56,478.

Lessee – Lease Cancellation Debit Credit TC

Budgetary Entry

480100 Undelivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid

Proprietary Entry 

693000 (N) Lessee Lease Expense

 101000 Fund Balance with Treasury 

310710 Unexpended Appropriations - Used - Disbursed 

 570010 Expended Appropriations - Disbursed

293010 Unfunded Lease Liability 

195900 Accumulated Amortization on Lessee Lease Assets

 195000 Lessee Right-To-Use Lease Asset

 711000 Gain on Disposition of Assets - Other 

5,000 

5,000 

5,000 

61,982 

37,652 

5,000 

5,000 

5,000 

 94,131 

 5,503 

B135 

F336 
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 58 of 73 November 2022

12. The Lessee pays variable lease payment to Lessor for the accrued usage of the equipment in Year 2. The Lessee records the disbursement of appropriations.

Lessee - Disbursement of Payment to Lessor for Variable Expenses Incurred and Accrued in Year 

2.

Debit Credit TC

Budgetary Entry

490100 Delivered Orders – Obligations, Unpaid 

 490200 Delivered Orders – Obligations, Paid 

Proprietary Entry 

211000 (N) Accounts Payable 

 101000 (G) Fund Balance With Treasury

310710 Unexpended Appropriations - Used - Disbursed 

570000 Expended Appropriations - Used - Accrued 

 310700 Unexpended Appropriations - Used - Accrued 

 570010 Expended Appropriations - Disbursed

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

B110 

B235 

13. The Lessee records the closing of lease and interest expenses to cumulative results of operations.

Lessee Debit Credit TC

Budgetary Entry

None 

Proprietary Entry

331000 Cumulative Results of Operations 

711000 Gain on Disposition of Assets - Other 

 693000 (N) Lessee Lease Expense

 671300 Lessee Lease Amortization

 633000 Other Interest Expense 

 

26,949 

 5,503 

 6,500 

18,826 

 7,126 

F336 

14. The Lessee records the closing of expended appropriation to cumulative results of operations, along with the closing of fiscal-year activity to unexpended 

appropriations.

Lessee Debit Credit TC
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 59 of 73 November 2022

Budgetary Entry

None 

Proprietary Entry

570010 Expended Appropriations – Disbursed

 570000 Expended Appropriations – Accrued

 331000 Cumulative Results of Operations 

 

310000 Unexpended Appropriations – Cumulative

310700 Unexpended Appropriations - Used – Accrued

 310710 Unexpended Appropriations - Used – Disbursed 

310100 (G) Unexpended Appropriations – Appropriations Received

 310000 Unexpended Appropriations - Cumulative

32,000 

 

30,500 

 1,500 

25,500 

 1,500 

30,500 

 

32,000 

25,500 

F336 

F342 

F342 

15. The Lessee records the closing of paid delivered orders to total actual resources.

Lessee Debit Credit TC

Budgetary Entry

490200 Delivered Orders – Obligations, Paid 

 420100 Total Actual Resources, Collected 

Proprietary Entry

None 

32,000 

32,000 

F314 

16. The Lessee records the consolidation of actual net-funded resources.

Lessee Debit Credit TC

Budgetary Entry

420100 Total Actual Resources, Collected 

 411900 Other Appropriations Realized 

 

Proprietary Entry 

 None 

25,500 

25,500 F302 
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 60 of 73 November 2022

Lessor Accounting

1. In Year 2, the Lessor records anticipated collections. (The amount of expected Year 2 monthly payments is $24,000, plus variable usage fees of $1,500 = $25,500.)

Lessor Debit Credit TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 449000 Anticipated Resources - Unapportioned Authority

Proprietary Entry

None

25,500

25,500

A140

2. The Lessor records the apportionment approval by OMB of anticipated authority.

Lessor Debit Credit TC

Budgetary Entry

449000 Anticipated Resources - Unapportioned Authority

 459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

Proprietary Entry

None

25,500

25,500 A118

3. In Year 2, the Lessee pays variable lease payment to Lessor for the accrued usage of the equipment in Year 1, and the Lessor records the receipt of this payment from Lessee.

Lessor - Receipt of Payment from Lessee for Variable Payments Earned in Year 1. Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 131000 (N) Accounts Receivable

 

1,500

1,500

1,500

1,500

1,500

1,500

1,500

1,500

C109

A123

A120
RTU LEASE GUIDANCE: BUDGETARY OPERATING WITH CANCELLATION

Effective Fiscal 2024

 Page 61 of 73 November 2022

4a. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 1. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 2, Month 1 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

657

657

5a. In month 1, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of Year 2, Month 1 Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 657

 1,343

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $77,513

6a. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 2, Month 1 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

 Page 62 of 73 November 2022

4b. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 2. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 2, Month 2 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

646

646

5b. In month 2, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of Year 2, Month 2 Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 646

 1,354

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $76,159

6b. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 2, Month 2 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

 Page 63 of 73 November 2022

4c. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 3. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 2, Month 3 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

635

635

5c. In month 3, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of Year 2, Month 3 Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 635

 1,365

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $74,794

6c. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 2, Month 3 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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Effective Fiscal 2024

 Page 64 of 73 November 2022

4d. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 4. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 2, Month 4 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

623

623

5d. In month 4, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of Year 2, Month 4 Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 623

 1,377

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $73,417

6d. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 2, Month 4 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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4e. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 5. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 2, Month 5 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

612

612

5e. In month 5, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of Year 2, Month 5 Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 612

 1,388

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $72,029

6e. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 2, Month 5 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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4f. The Lessor recognizes interest revenue for the amortization of the discount on the lease receivable for month 6. (SFFAS 54, Par. 60)

Lessor - Accrual of Interest Revenue for Year 2, Month 6 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

134000 Interest Receivable - Not Otherwise Classified

 531000 Interest Revenue - Other

600

600

5f. In month 6, the Lessee pays monthly lease payment to Lessor, and the Lessor records the receipt of payment. The Lessor allots the funds.

Lessor - Receipt of Year 2, Month 6 Lease Payment Debit Credit TC

Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment

 451000 Apportionments 

451000 Apportionments

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 (G) Fund Balance With Treasury

 134000 Interest Receivable - Not Otherwise Classified

 193000 Lessor Lease Receivable

2,000

2,000

2,000

2,000

2,000

2,000

2,000

 600

 1,400

C109

A123

A120

Ending Lease Receivable Balance of USSGL 193000 = $70,629

6f. The Lessor recognizes revenue from the measurement of the lease receivable as earned revenue for the reporting period via straight-line amortization. A Lessor should 

amortize the unearned revenue (recognizing it as earned revenue) in a systematic and rational manner of life of the lease. (SFFAS 60, Par. 26)

Lessor - Recognition of Unearned Revenue for Year 2, Month 6 Debit Credit TC

Budgetary Entry

None

Proprietary Entry 

233000 Lessor Lease Unearned Revenue

 593300 Amortization of Unearned Lessor Revenue

1,569

1,569
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*(For brevity, the recurring entries of Lessor Receipts for Months 7-12 are not illustrated, but amounts can be seen in the amortization table.)* 

7. The Lessee calculates 125 hours of equipment usage at $12/ hour in Year 2. $1,500 Variable payments should be recognized as revenue in the period in which 

they are earned. (SFFAS 54, Par. 57) The invoice is due for payment at the beginning of Year 3. 

Lessor - Accrual of Lease Revenue for Variable Payments Earned in Year 2. Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

131000 (N) Accounts Receivable 

 593000 (N) Lessor Lease Revenue 

1,500 

1,500 

8. In Year 2, the Lessor records depreciation expense on equipment it owns (the underlying asset within the lease.) $300,000 cost / 20-year useful life = $15,000.

Lessor Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

671000 (N) Depreciation, Amortization, and Depletion 

 175900 Accumulated Depreciation on Equipment 

15,000 

15,000 

E120 

9. At the end of Year 2 of the lease, the Lessee informs the Lessor that it does not receive funding/appropriations for Year 3; The lease contract is fully 

cancelled. The Lessor receives the $5,000 cancellation penalty from the Lessee. Both parties reduce the carrying values of the lease asset/liability and recognize 

a gain/loss for the difference (SFFAS 54, Pars. 82-83.) 

The carrying value of the Lessor Lease Receivable, net of the $2,000 balance of Allowance for Loss, is $61,983, while the Lessor Unearned Revenue is $54,479.

Lessor – Lease Cancellation Debit Credit TC
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Budgetary Entry

426600 Other Actual Business-Type Collections From Non-Federal Sources

 461000 Allotments – Realized Resources 

Proprietary Entry 

101000 Fund Balance with Treasury 

 593000 (N) Lessor Lease Revenue 

233000 Lessor Unearned Revenue 

193900 Allowance for Loss on Lease Receivable

721000 Loss on Disposition of Assets- Other

 193000 Lessor Lease Receivable 

5,000 

5,000 

 54,479 

 2,000 

 5,504 

5,000 

5,000 

61,983 

10. In Year 2 at cancellation, the Lessee pays variable lease payment to Lessor for the accrued usage of the equipment in Year 2, and the Lessor records the 

receipt of this payment from Lessee. The Lessor allots the funds. 

Lessor - Receipt of Payment from Lessee for Variable Payments Earned in Year 2 at cancellation. Debit Credit TC

Budgetary Entry

406000 Anticipated Collections From Non-Federal Sources

 449000 Anticipated Resources - Unapportioned Authority

449000 Anticipated Resources - Unapportioned Authority 

 459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 

426600 Other Actual Business-Type Collections From Non-Federal Sources

 406000 Anticipated Collections From Non-Federal Sources

459000 Apportionments - Anticipated Resources - Programs Subject to Apportionment 

 451000 Apportionments 

451000 Apportionments 

 461000 Allotments – Realized Resources 

 

Proprietary Entry 

101000 (G) Fund Balance With Treasury 

 131000 (N) Accounts Receivable 

 

1,500 

1,500 

1,500 

1,500 

1,500 

 1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

A140 

A118 

C109 

A123 

A120 
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11. The Lessor records the closing of revenue to cumulative results of operations.

Lessor Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

593300 Amortization of Unearned Lessor Revenue

593000 (N) Lessor Lease Revenue 

531000 Interest Revenue - Other

 331000 Cumulative Results of Operations 

18,826 

 6,500 

 7,126 

32,452 

F336 

12. The Lessor records the closing of depreciation expense to cumulative results of operations in Year 2.

Lessor Debit Credit TC

Budgetary Entry

None 

Proprietary Entry 

331000 Cumulative Results of Operations 

721000 Loss on Disposition of Assets- Other

 671000 Depreciation, Amortization, and Depletion 

15,000 

 5,504 

20,504 

F336 

13. The Lessor records the closing of unobligated balances in programs subject to apportionment to unapportioned authority.

Lessor Debit Credit TC

Budgetary Entry

461000 Allotments – Realized Resources 

 445000 Unapportioned – Unexpired Authority 

Proprietary Entry 

None 

32,000 

32,000 

F308 
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14. The Lessor records the consolidation of actual net-funded resources.

Lessor Debit Credit TC

Budgetary Entry

420100 Total Actual Resources, Collected 

 426600 Other Actual Business-Type Collections From Non-Federal Sources

 

Proprietary Entry 

 None 

32,000 

32,000 

F302 

Fiscal Year 2 Post-Closing Adjusted Trial Balance: 

FISCAL YEAR 2 POST-CLOSING LESSEE LESSOR

Account Description Debit Credit Debit Credit

Budgetary

420100 Total Actual Resources, Collected - - 56,000 -

445000 Unapportioned - Unexpired Authority - - - 56,000

480100 Undelivered Orders – Obligations, Unpaid - - - -

490100 Delivered Orders, Obligations Unpaid - - - -

490200 Delivered Orders – Obligations, Paid - - - -

Total - - 56,000 56,000

Proprietary

101000 (G) Fund Balance With Treasury - - 56,000 -

175000 Equipment - - 300,000 -

175900 Acc. Depreciation on Equipment - - - 180,000

193000 Lessor Lease Receivable - - - -

193900 Allowance for Loss on Lease Receivable - - - -

195000 Lessee Right-To-Use Lease Asset - - - -

195900 Accumulated Amortization on Lessee Lease Assets - - - -

233000 Unearned Lessor Revenue - - - -

293000 Lessee Lease Liability - - - -

293010 Unfunded Lease Liability - - - -

310000 Unexpended Appropriations - Cumulative - - - -

331000 Cumulative Results of Operations - - - 176,000

Total - - 356,000 356,000
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Year 2 Financial Statements:

STANDARDIZED BALANCE SHEET – YEAR 2

Line No. YEAR 2 LESSEE LESSOR

Assets (Note 2)

Intra-governmental

1 Fund Balance with Treasury (Note 3) (101000) - 56,000

7 Total intra-governmental assets - 56,000

Other than intra-governmental

12 General and right-to-use property, plant, and equipment, net (Note 10) (175000E, 175900E) - 120,000

18 Total other than intra-governmental - 120,000

19 Total assets - 176,000

Liabilities (Note 13)

39 Total liabilities - -

Net position

42.2 Cumulative results of operations - Funds from other than Dedicated Collections (331000E) - 176,000

43 Total net position - 176,000

44 Total liabilities and net position - 176,000

STATEMENT OF NET COST – YEAR 2

Line No. YEAR 2 LESSEE LESSOR

Gross Program Costs (Note 21):

1 Gross costs (633000E, 671000E, 671300E, 693000E, 721000E) 32,452 20,504

2 Less: earned revenue (531000E, 593000E, 593300E, 711000E) 5,503 32,452

3 Net program costs 26,949 (11,948)

5 Net program costs including Assumption Changes: 26,949 (11,948)

8 Net cost of operations 26,949 (11,948)

STATEMENT OF CHANGES IN NET POSITION – YEAR 2

Line No. YEAR 2 LESSEE LESSOR

Unexpended Appropriations:

1 Beginning Balance (310000B) 5,000 -

3 Beginning Balance, as adjusted 5,000 -

4 Appropriations received (310100E) 25,500 -
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7 Appropriations used (310700E, 310710E) 30,500 -

8 Net Change in Unexpended Appropriations (calc.) (5,000) -

9 Total Unexpended Appropriations – Ending (calc.) - -

Cumulative Results of Operations:

10 Beginning Balances (331000B) (3,552) 164,052

12 Beginning balances, as adjusted (3,552) 164,052

14 Appropriations used (570000E, 570010E) 30,500 -

21 Revenue From (Net Cost of) Operations (+/-) (26,949) 11,948

22 Net Change in Cumulative Results of Operations (26,949) 11,948

23 Cumulative Results of Operations – Ending - 176,000

24 Net Position (calc.) - 176,000

Year 2 Reclassified Financial Statements:

STANDARDIZED BALANCE SHEET – YEAR 2

Line No. YEAR 2 LESSEE LESSOR

Assets (Note 2)

Intra-governmental

1 Fund Balance with Treasury (Note 3) (101000) - 56,000

7 Total intra-governmental assets - 56,000

Other than intra-governmental

12 General and right-to-use property, plant, and equipment, net (Note 10) (175000E, 175900E) - 120,000

18 Total other than intra-governmental - 120,000

19 Total assets - 176,000

Liabilities (Note 13)

39 Total liabilities - -

Net position

42.2 Cumulative results of operations - Funds from other than Dedicated Collections (331000E) - 176,000

43 Total net position - 176,000

44 Total liabilities and net position - 176,000
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RECLASSIFIED STATEMENT OF NET COST – YEAR 2

Line No. YEAR 2 LESSEE LESSOR

1 Gross cost

2 Non-federal gross cost (633000E, 671000E, 671300E, 693000E, 721000E) 32,452 20,504

6 Total non-federal gross cost (calc.) 32,452 20,504

9 Department total gross cost (calc.) 32,452 20,504

10 Earned revenue

11 Non-federal earned revenue (531000E, 593000E, 593300E, 711000E) 5,503 32,452

14 Department total earned revenue (calc.) 5,503 32,452

15 Net cost of operations (calc.) 26,949 (11,948)

RECLASSIFIED STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION – YEAR 2

Line No. YEAR 2 LESSEE LESSOR

1 Net position, beginning of period (310000B, 331000B) 1,448 164,052

7 Financing sources:

7.1 Appropriations received as adjusted (rescissions and other adjustments) (RC 41)/1 (310100E) 25,500 -

7.2 Appropriations used (RC 39) (310700E, 310710E) 30,500 -

7.3 Appropriations expended (RC 38)/1 (570000E, 570010E) (30,500) -

7.30 Total financing sources (calc.) 25,500 -

8 Revenue From (Net cost of) Operations (+/-) (26,949) 11,948

9 Net position, end of period (calc.) - 176,000